There are more than two dozen marijuana companies operating in Northeast Ohio, according to Crain’s new Marijuana Business Directory.
But of the 52 state licenses they represent, nearly one-third are controlled by out-of-state companies at just a few years past the launch of the Ohio Medical Marijuana Control Program.
Former Ohio Gov. John Kasich signed House Bill 523, which established the OMMCP, in summer 2016. Business licenses for marijuana cultivators, processors and dispensaries started to be allocated a couple years later.
Legal sales of marijuana eventually commenced in January 2019. The industry has been blooming slowly ever since.
Ohio regulators made a point of having local ownership of marijuana companies in the early days, but this was never expected to last.
License holders are required to be in operation for just one year before they can apply to transfer their licenses — which are in high-demand and equally expensive and cumbersome to secure — to another entity.
Data for the Marijuana Business Directory shows acquisitions by out-of-state owners have been playing out in recent years with several entities just in Northeast Ohio alone where 30% of licensed businesses are operated by non-Ohio parent companies.
These acquisitions speak to the efforts of multi-state operators (MSOs) to secure a piece of Ohio’s burgeoning marijuana market.
Take for example Acreage Holdings, an MSO with U.S. headquarters in New York.
The company in early October announced the acquisition by its subsidiary High Street Capital of vertically integrated Ohio marijuana outfit Greenleaf Gardens. The deal includes a processing (Greenleaf Therapeutics) and Level I cultivation facility in Middlefield with space for future expansion. It also got five dispensaries (Greenleaf Apothecaries) operated under the brand name The Botanist, a name that belongs to and has been licensed by Acreage. Four of those retail stores are in Northeast Ohio.
Acreage has said the Greenleaf dispensaries account for 20% of the state’s current retail market.
Other local marijuana companies, according to Crain’s research, are controlled by parent organization in states like Illinois, New York, Florida, Arizona and Canada.
As the industry matures, its likely industry consolidation will continue with MSOs doing much of the snapping up.
As for other deals that have played it already, there is Florida-based Ayr Wellness, which bought both Ohio Medical Solutions Inc. and Parma Wellness Center in March 2021.
In September, Canadian company Body and Mind Inc. completed its acquisition of NMG Ohio, which has licenses for a dispensary as well as a processing facility in Elyria.
The goal for many of these companies is to get involved in markets now where they can get ahead of the seemingly inevitable onset of adult-use, recreational marijuana programs. Many companies strive to be vertically integrated, which means controlling cultivation, manufacturing and dispensary operations.
Regulators also are preparing to award another 73 new dispensary licenses after grossly underestimating patient demand.
There are currently three separate efforts in Ohio alone looking to establish an adult-use market. Those include separate legalization bills from Democratic and Republican lawmakers as well as a citizen-led effort through what is known as an “enacted statute.”